By Daniel Hunter
The latest HSBC Commercial Banking Trade Forecast details a shift in the goods produced by emerging markets, this will see a move towards the production of higher-value goods, presenting opportunities for forward thinking UK companies looking to expand.
The UK’s trading outlook shows little change in terms of trade partners over the next 17 years with top export destinations continuing to be Germany, USA, France, Ireland and China.
However, with HSBC’s Trade Forecast suggesting that the fastest growing trade partners between 2013 — 2030 will be from emerging markets, now is the time for UK businesses to explore the opportunities offered by trading with these countries.
Rapid industrialisation and increasing wages, coupled with maturing consumer demand in many of the countries along the Global South-South corridor are driving different types of global trade growth. The HSBC report highlights how these trends are changing the types of goods imported, manufactured and subsequently exported.
As countries shift towards higher value sectors there are significant opportunities for companies to evolve and grow. The UK report showed a shift towards increasingly specialised sectors such as Industrial machinery, Transport Equipment and Chemicals and Pharmaceutical.
The future sees increasing demand from emerging countries for goods and this is where UK businesses can work with these countries to become key trade partners. This shift towards the production of higher value goods and services is particularly evident in Asia.
“Emerging markets are developing at a phenomenal pace and are set to reshape world trade patterns over the next 20 years," Peter McIntyre, HSBC’s Head of UK Trade, said.
"By expanding their operations in to new, higher value sectors, they are driving more developed nations to specialise and diversify to compete. Working with these countries could be critical for UK businesses who want to remain competitive in the future and could help support the future of the UK economy.
"UK businesses have so much to offer emerging countries through their specialist skills, products and services and now is the time to start tapping into these opportunities. HSBC continues to be a key partner to innovative and forward-looking SMEs that are ready to take up the challenge of international expansion as we aim to be the bank of choice for international trade."
The Forecast identifies that developed nations, including the UK, will evolve the goods they export as they continue to trade in Industrial Machinery, but increasingly at the higher-end of the sector. Export growth in the UK is increasingly being driven by high-technology manufactured goods, as low-cost producers in the emerging markets satisfy an increasing share of demand for less sophisticated products.
Industrial Machinery, ranging from large power generating machinery to small parts for domestic electrical items, will extend its dominance as the world’s top export sector. It will encompass around 25% of goods exported among the top 25 trading nations by 2030, and contribute over a third of the growth in total merchandise exports from 2013 according to the Forecast.
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